Tuesday, February 21, 2012

Would a 'Modest Member' please take an interest in anti-dumping regulation?

It was good to see the return of ‘The Modest Member’ column
in the Australian Financial Review a couple of weeks ago. The original column
was written by Bert Kelly, who used his wit and wisdom to good effect in
promoting free trade, much to the discomfort of many people on both sides of
politics. The latter-day modest members will make a worthwhile contribution if they display half the wit, wisdom and courage of Bert Kelly.

It is not yet clear whether the latter-day modest members
will have the courage to emulate Bert Kelly. The series started with a column by
Jamie Briggs on 7 February about lifting the dead hand of government i.e.
reducing government spending. Today’s column by Kelly O’Dwyer is about the high
cost of regulation. This is not a bad start, but it is hardly a test of moral
character. So far Briggs and O’Dwyer have written the sort of stuff conservative
politicians usually write when they are not in government.

A useful test of character for the modest members would be to
attempt to emulate Bert Kelly by writing something sensible about Australia’s
anti-dumping system. The modest members could usefully begin their
consideration with an article by Bert, published in March 1972 and reprinted in
‘Economics Made Easy’, in which he explained that export prices that are lower
than domestic prices are quite common in Australia and elsewhere. He noted that
when we do it the practice is known as ‘marginal pricing’ rather than dumping. If
the modest members take up this issue they might note that Austrade actually encourages
prospective Australian exporters to use this practice.

If the modest members look carefully at the Productivity Commission’s recent report on anti-dumping duties they will see that the
Commission found that none of the economic arguments that had been advanced in
support of the anti-dumping system ‘provide any justification for Australia to
retain an anti-dumping system’. In looking at this report and subsequent
responses by the government and opposition, they might ponder whether or not the
Commission will turn out to have been correct in its judgement that the
anti-dumping system should be retained - on the grounds that it is unlikely to
do much harm and may continue to be helpful in dealing with aspects of protectionist
sentiment within industry and the community.

The modest members should ask themselves what Bert Kelly
would have thought of proposals by their political colleagues to require foreign
producers to prove their conduct hasn’t hurt Australian industry. They should
also ask themselves what consequences are likely to follow from the
government’s plans to ‘streamline’ the anti-dumping system. In particular, they
should ponder the appropriateness of proposals of the International Trade
Remedies Forum – the high sounding title the government has given to an unholy
alliance of industry, unions and bureaucrats who benefit from the anti-dumping
system – to enlist the Australian Bureau of Statistics to help complainants
make a case for anti-dumping assistance.

One of the great strengths of Bert Kelly’s writing was his
use of particular examples to illustrate the points he was making. In that
regard, the modest members might find plenty to interest them in the current
anti-dumping inquiry relating to aluminium wheels from China. In the light of
recent discussions concerning further budgetary assistance to the car industry,
they might ask themselves whether there is not some irony in a situation where Australian
taxpayers could end up having to pay for the additional cost of imported inputs
if this anti-dumping case is successful. If they read the submission by Ford Australia they
might wonder about the potential for a firm that is involved in protracted and
acrimonious legal proceedings against another firm to initiate anti-dumping
action as a tactic in a legal battle. If they read the submission by GM Holden,
which argues against anti-dumping action because of its adverse effects on
down-stream users, they might wonder whether the government was wise to reject
the Productivity Commission’s recommendation that a public interest test should
be included in the anti-dumping system. They might wonder why GM and its
advisors think that line of argument might be influential.

It would not surprise me, however, if the latter-day modest members
decide not to accept the challenge of writing about anti-dumping. Their
political careers might be at risk if they start questioning the views of SophieMirabella the shadow minister for industry protection. As they tell themselves
that discretion is the better part of valour they may take comfort from the
fact that Bert Kelly pretended not to be without fear. Bert ended his
anti-dumping article by telling readers that he didn’t ‘feel like chasing after
the anti-dumping hare’ because ‘Mavis says I am in enough trouble already
without getting mixed up with this kind of nonsense’.

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